Legislative Analyst's Office

Analysis of the 2001-02 Budget Bill

Janitorial/Contract Services (9908)

The budget proposes $6 million ($2 million each from the General Fund, special funds, and nongovernmental cost funds) to fund increased costs of personal services contracts as a result of
providing employee benefits to janitors, housekeepers, custodians, food service workers, laundry workers, window cleaners, and security guards at a level valued at not less than 85 percent of
the state employer cost of comparable benefits provided to state employees for performing similar duties.

Janitorial/Contract Services

We withhold recommendation on the $6 million requested for employee benefit cost related to janitorial/contract services pending receipt and review of information from the
Department of Finance about how the funds appropriated in the 2000-01 Budget Act were used and the basis for the budget-year request.

Government Code Section 19134 requires that contractors providing the state with janitorial and related services provide their employees benefits equal to 85 percent of the employer (state)
cost of benefits provided to state employees performing similar duties. Employers can also satisfy this requirement by providing an in-lieu cash payment in the same amount.

The cost of benefits provided to state employees is calculated by the Department of Personnel Administration (DPA) by February 1 of each year. Under regulations adopted by the Department
of General Services, state janitorial contractors can apply for an increase in their contract rates if the DPA calculation results in increased costs for them to furnish the required employee
benefits. The budget proposes a total of $6 million for this purpose and authorizes the Director of Finance to augment the budgets of departments when the DPA calculation results in higher
costs to the departments for contracts they have for janitorial services, and authorizes the Director to augment the appropriations if necessary for this purpose. This is the same level of funding
and budget language that was included for this purpose in the 2000-01 Budget Act.

We withhold recommendation pending receipt, prior to budget hearings, of a report from the Department of Finance on the method used in the current year to allocate funds for this purpose,
the amount paid (or owed) to each contractor, the balance available in the current-year appropriation, and the basis for the budget-year request.